Small business owners will receive up to $1 billion in tax breaks for digital spending, including upgrades to cybersecurity systems or online sales platforms, as the government pushes more firms to embrace the online economy.
Under changes announced on Tuesday night, the government will allow eligible businesses to deduct $120 for every $100 they spend on services that support their digital capability, which could include spending on websites, cloud computing or portable payment devices.
Under the measure, the government said more than 3.6 million businesses with annual turnover of less than $50 million would be able to claim an additional 20 per cent deduction on costs incurred on business expenses and depreciating assets that support “digital adoption”.
The government said spending of up to $100,000 a year would be eligible for the bonus deduction, and firms would be able to claim the tax break on purchases made between now and June 30, 2023.
Treasurer Josh Frydenberg said the bonus deduction was aimed at cutting the cost of going digital and backing businesses that were “embracing the digital revolution”.
“From tonight, every hundred dollars these small businesses spend on digital technologies like cloud computing, eInvoicing, cybersecurity and web design will see them get a $120 tax deduction,” Mr Frydenberg said.
Budget documents said businesses would be able to claim the bonus deduction on a range of spending, including improvements to cybersecurity systems, digital tracking for livestock, subscriptions to enhance data analytics and marketing, and a digital inventory tracking system.
The change was announced alongside a 20 per cent bonus deduction for small business spending on training staff and comes after the government previously extended its instant asset write-off scheme for small businesses until June 2023. Banks have credited the instant asset write-off with sparking a surge in spending on equipment such as tractors and utes.